Dalberg Workshop - Beyond BRIC
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Transcript of Dalberg Workshop - Beyond BRIC
How to think about strategy for
new emerging markets
Beyond BRIC
December, 2010
1
Dalberg provides strategic advice to funders, NGOs, social entrepreneurs,
corporations, governments and international institutions
World Bank
Broad range of clients and partners
Global presence
Johannesburg
Santiago
New York
Washington DC
Nairobi
San
Francisco
Geneva
Copenhagen
DakarMumbai
Strategic advisory services
• Strategic roadmaps and portfolio design
• Impact assessment
• Multi-stakeholder facilitation
• Recommendations on strategic partnerships
• Due diligence on grantees/investees
• Technical assistance to grantees/investees
• Program/portfolio management
• Operational improvements (for large programs)
• Policy advice (for governments and international institutions)
• Global health
• Access to finance
• Climate change, conservation and energy
• Programs in conflict areas, and post-conflict recovery
• Agricultural development
• Education
• Human rights
• Emerging and bottom-of-pyramid markets
• Corporate supply chains
Expertise in topics critical to global development
Most Danish companies are still producing in Denmark for a Danish or EU
audience
2
Em
erg
ing
mark
ets
Denm
ark
/
EU
Sale
s
Denmark /EU Emerging Markets
Production
Problem child Cash Cow
Falling star Rising Star
Best Seller
Bo Concept
Most
Danish C20
companies
Danish
engineering
firms
Majority of
Danish SMEs
75% of global
economic growth
is taking place
here
Strategy formulation and execution is a different exercise when the context
may change in a matter of months instead of years
3
Economic
trends
Development
sector
conditions
Demand and
opportunity
trends
Development
and
opportunity
trends
Still a reality, but in
decline....
• State own
enterprises that are
very active players
• Legislation not
implemented
• Hiring or firing of
staff can be a year
long exercise
• Red tape is given
Megatrends have a faster
acceleration and deeper impact..
• Urbanisation from rural to urban
• The effects of climate change
• Explotion in the need of health,
agriculture, and energy services due
to demographics
The new emergng reality...
• Explotion in South-South trade
• Local financial are becoming
mature
• Emergence of middle class with
new demands
• Wish for technology leap
frogging
• Governments that increasingly
are becoming assertive and can
stimulate own economy
• Desire for Public-Private
Partnership models
Strategic thinking in frontier markets is a game of additionality
4
Acess Strategy for
frontier markets
Access/par-
tnerships
Value
proposition
Value
proposition
Value chain
Partnering
Total
Economics
and
financing
Barrier of
entrance
How well does your product and business model
align to the needs of the local market?
5
The key challenges
26%
35%
What can be done?
•How to avoid changing price
policy, product features, and
learning a new market in one
exercise
•Avoid having too many
business models running in
parallel due to the often very
diverse market needs and
spending potential of various
segments
•Understand the public and
private market segments and
be willing to change e.g. from
B to C models to B to B
models
•Avoid focusing only on
countries, but give sufficient
attention to the company’s
role in a global or regional
value chain
Value
proposition
•A Swedish house fabrication company
located in Malmø
•Offering: prefabricated houses and local
production partnership
•Product: Structural insulated panels
(SIPs) that are made by sandwiching a
core of expanded polystyrene (EPS)
between two structural boards
How well does the value chain to your target market work?
6
26%What can be done?
•How to recreate a profitable
business in a value chain, where
many of the typical rutine and
commoditized elements are weak
or non-existing
•How to penetrate a market where
specific companies/public
agencies are controlling vital
parts of the value chain?
•Create partnerships with
organisations that can provide
capabilities to close the gaps in
the value chain
•Engage in policy dialogue and
best practices with governments
and potential develop joint
programs
•Establish alliances or acquire
with gatekeeper businesses
Value chain •Across the value chain was obstacles in
origination, process & refining,
packaging, marketing/distribution, and
warehousing
•Also physical infrastructure, skills gab,
and red tape and high tarrifs had to be
addressed
Dalberg client NN, a multinational
agriculture company seeking to enter
African market
The key challenges
Who do you critically depend on in your value chain and what is the structure
of the relationship?
7
35%
•How to find the correct partners
that can make up for the short
comings in the value chains and
eco systems?
•How to constructive the true win-
win situations, so non-traditional
partners also have a long-terms
interest in sustaining the
partnership?
•Use analoges from other
industries or other countries to
find out what features the most
desired partners should have
• Consider all partner options from
alliances, M/A, joint programs,
etc.
•Conduct very serious due
dilligence on potential non-
traditional partners
Partnering
26%What can be done?
The key challenges
By reaching out to 20,000 companies and score 800 institutions we found a new
class of very professional non-commercial partners
The top of the list was a surprice to
many in the sector
Hundreds of programs are being now developed every year
Source: Organization websites (links above), Partnering for Global Development (BCLC), Public-Private
Partnerships Transform Aid (SSIR), AD internal research and analysis
Agency – Program Key Figures Key Trends, Focus Areas and Partners
DANIDA – Dept for
Business
Cooperation & TA
$3M budget
96 B2B
partnerships
Partnerships focus on Danish-based organizations and local partners:
•B2B Partnerships – Long-term business linkages with Danish & local companies
•Innovative Partnerships for Development (IPD) – Partnerships in CSR and SRI
DFID – Business for
Development
2008/2009 DFID
aid: £3.3B (57%)
bilateral, £2.3B
(39%) multilateral
£337B channeled
thru UK NGOs
Works across all sectors of donors and investors. Focus on MNC partnerships:
• Push Boundaries – business practices to support MDG
• Promote growth –create the right conditions to encourage business
• Responsibility –promote successful corporate responsibility
DFID’s recent PPPs focused on transparency, health, & innovative finance facilities:
•Extractive Industries Transparency Initiative (EITI)
•Major funder of the GAVI Alliance
• Helped create International Finance Facility for Immunization (IFFIm)
GTZ – Public-Private
Partnership
437 alliances
$238.4M funds
(thru 2007)
•PPPs: partner through competitions, strategic alliances, financing facility
•Global Compact: coordinates the German Global Compact Network
•CSR: advisor to help companies address and implement CSR practices
•Projects –56% in Asia & Africa; 41% in economic reform
•Partnership Fund Ratio – 37% GTZ, 49% private, 15% other.
SIDA – Dept of Dev
Partnerships
$4-$5M est. budget
for 2010
Partner with private sector, multilaterals, civil NGOs and universities:
•Private sector partnering focused on financing, cooperation forums, dialogue, business
information and competence development.
•Swedish Business for Development (B4D) – linking all businesses SMEs MNCs
USDA - GDA
$9B in alliances
680 alliances
1,700 partners
~$15M program
budget in 2005
Leader in cross-sector partnering, focus on multiple partners and target USAID investment at
~25% and leveraging field staff to drive partnerships.
•16 person team divided by region sector, technical training
•Field-driven partnerships
•2.7:1 avg partners: USAID ratio
•Moving toward Global Framework model
Partnership building has over the past 10 years gone from symbolic to
very operational and value-adding
10
Traditional Development:
• Supply-side bias
High
Low
Low HighFinancial development
Social
development
Emerging Partnership Models
Market Based Approach
• Demand-side bias
Complex
Coalition
Structures
Public
Sector
Private
Sector
Source: ”Development Collaboration: None of Our Business?”, Accenture Development Partnerships
How much of the value of your products are you effectively able to capture?
11
•How to finance services from
commercial and non-traditional
partners in a way that still makes
ones own products profitable?
•Create public-private partnerships
•Find social investors that are
willing to pay for the additionality
•Connect north and south sales
and marketing efforts
•Find alternative income sources
for partners
Total
economics •Vestergaard Frandsen is a European
company specializing in complex
emergency response and disease control
products (Bed nets, Lifestraw)
•The company have several partnering
models where they don’t bare all the costs
to sell their products:
•Donation model e.g. via partnership
with Rotary
•Carbon credit markets (could over
make their Lifestraw free)
• Joint programs with UNICEF, where
their products in a part of a larger
health package and campaign
•Social investment, where Acumen is
co-funding scaling up mechanisms
26%What can be done?
The key challenges
Questions for discussion
12
Questions
•What do you see as the biggest barrier to getting started on
emerging markets?
•What do you anticipate to be the largest strategic challenge to obtain
a correct posture in an emerging market?
• Is there anything that the Danish Government or industry
associations can do to help overcome these additional strategic
obstacles